The Government of Indonesia is considering reform of its consumer subsidies for liquefied petroleum gas (LPG) due to its rising fiscal cost: IDR 25 trillion (USD 1.9 billion) in 2016: around half of its total energy subsidy expenditure.
Oil, gas and coal are multi-billion dollar businesses, yet every year fossil fuel companies get billions in tax breaks and handouts. In a world that’s shifting to cleaner sources of energy, those subsidies don’t make sense—especially when they work against the other actions we’re taking to fight climate change.
Indonesia’s Ministry of Energy and Mineral Resources estimates that around six million households are still without access to electricity, and large investments are needed to supply reliable power across the country.
Coal is a central focus in this quest, and the Indonesian government expects it to continue to play a significant role in the decades to come. However, coal has harmful environmental and health impacts, while cleaner, renewable energy alternatives are becoming increasingly cost-competitive.
China is the world’s most populous country and in 2016, the world’s #1 in coal consumption and production; # 2 in the consumption and production of oil products; and #3 in natural gas consumption.
Energy is a key issue in China’s policies, and government support has played an important role steering the development of the energy sector. China is determined to shift to a low-carbon economy: the country has committed to reach the peak of GHG emissions around 2030 and “to phase out inefficient fossil fuel subsidies” as both a G-20 and APEC member.
‘Global’ estimates of fossil-fuel subsidies vary between organizations: from a total of US$ 2 trillion for the IMF’s post tax estimate to the IEA’s US$ 544 billion. This short primer developed by the Global Subsidies Initiative (GSI) in conjunction with the OECD, World Bank, IMF and the IEA aims to explain the estimates and methods used.
This policy brief analyzes the current policy environment governing kerosene and off-grid solar use. It sets out a suite of detailed policy interventions that can be implemented to achieve a systemic transition from kerosene to solar for lighting in rural India.
The boom and eventual bust of resource-dependent regions has played out across the world many
times over the last 50 years. As extractive industries go into decline due to resource exhaustion,
competition from elsewhere or changing consumption of energy, demands are made for subsidies
to revive the industry and maintain jobs. Concurrently, policy-makers, realizing that the decline of
a resource extraction industry will cause social and economic hardship, begin the search for new
industries to replace lost jobs and maintain economic development.
Electricity generation remains a key issue for Indonesian policy-makers. Millions of households are still without access to electricity, and large investments are needed to supply reliable power for households and industries across the country.